US Treasury buyback of $6 billion in ultra-long bonds: triple the amount planned for early August, 30-year yield still hits highest since 2007

The US Treasury said it will buy up to $6 billion of longer-dated government bonds on Thursday, in the first such operation under an expanded buyback programme by Treasury Secretary Scott Bessent aimed at curbing the recent rise in borrowing costs. The maximum size is triple the $2 billion initially communicated to investors in early August. That original plan was abandoned in a surprise announcement on August 19, when the Treasury said it would "at least double" the size of such operations. The 20- to 30-year Treasuries targeted in Thursday's buyback extended their decline on Wednesday after the announcement. The 30-year yield touched an intraday high of 5.38 per cent subsequently hitting a peak of nearly 5.40 per cent earlier this month, the highest level since 2007. Since the outbreak of war between the US and Iran in late February, rising energy costs have pushed global bond yields higher. This has also reversed the outlook for Federal Reserve monetary policy Chair Kevin Warsh raised overnight rates last week for the first time since 2023 to help curb price pressures. Facing criticism that the move amounts to intervention and does nothing to address underlying fiscal challenges, Bessent defended his decision to expand the buyback programme. He said on Monday that he acted after concluding the market had "deviated" from equilibrium prices. He claimed that from the August 19 announcement to September 21, the 30-year Treasury yield rose by only about 1 basis point. IIF warns Earlier on Wednesday, one of the world's largest financial industry associations warned that "financial engineering"-style attempts would not resolve underlying debt dynamics. In a report, the Institute of International Finance said interventions such as buying securities in the secondary market "may provide temporary relief but do not address the structural drivers of rising debt". After the previous expanded buyback announcement on September 9, when the Treasury announced a maximum size of $6 billion bonds fell. Although this was already triple the initially announced $2 billion, some market participants had predicted a larger size given the Treasury's guidance of "at least double", which in theory set no upper limit. In the end, the Treasury did not use its full maximum allowance, buying only about $5.2 billion of 10- to 20-year bonds. According to officials, this reflected a lack of competitive bidding. In that operation, investors offered the Treasury $10.5 billion of bonds.